It won’t relieve subdued confidence.
Despite the Australian Retailers Association (ARA) and National Retail Association (NRA) welcoming yesterday’s interest rate cut to a record low of 1.5%, retailers from around the country believe the Reserve Bank of Australia’s (RBA) decision isn’t enough to instil confidence back into consumers.
Jeff Karklins from Balaklava Electronics in South Australia has observed relative consumer confidence, although spending is being absorbed in a number of ways.
“Electricity prices were increased on July 31 and we are expecting another increase shortly. Consumers are worried about the cost of power, particularly with the use of heaters as it has been a very cold and wet winter here in South Australia,” Karklins said.
“Consumers are still purchasing products that they need, rather than products that they want, and I don’t see the small cut in interest rates making a difference,” he added.
Steven Ortt from Betta Home Living Bundaberg in Queensland has observed a money-conscious attitude from consumers.
“Our customers have been purchasing appliances and electronics that are ‘good value for money’ rather than splashing out at the premium end of the category. Refrigeration and laundry has been selling well and the Olympics has pushed up sales of TVs, but again, generally these are at the mid- price points.
“Consumer confidence has been very low for some time now and building approvals are the worst they have ever been. I don’t believe consumers are driven by rate cuts, especially because the banks do not pass on the full cut, so I can’t see any impact on spending.
Hans Vanderstadt from Camberwell Electrics in Victoria agreed with Ortt, noting a subdued confidence among consumers.
“Despite the conclusion of the Federal Election and yesterday’s rate cut, the overall picture for consumers and the retail industry is quite gloomy.
“Consumers remain worried about the overall economy and their safety on a local and global scale. Although the interest rate cuts are an attempt to boost confidence and positively affect consumer spending, I don’t foresee an improvement for the second half of the year. We are all just hoping for a hot summer to boost sales,” he said.